Two Market Distortions Do Not a Free Market Make
According to an article in the Wall Street Journal, Mayor Michael Bloomberg proposed that New York City assess a $300 permit fee on film shoots, in an effort to assuage the city’s budgetary problems.
This represents an unfortunate trend in public policy: to counteract the negative consequences of one policy, government officials propose another policy that further distorts the market, instead of repealing the first policy. It’s similar to the way in which the federal government subsidizes the production of corn, then proposes to tax products made with corn syrup. If New York City were serious about solving its budgetary problems, perhaps it would consider eliminating the 5-percent film tax credit that it offers to producers, instead of slapping fees on top of subsidies.
I have additional concerns about the policy. From the article:
“Everybody I’ve talked to about this—and I’ve called a number of producers—they couldn’t stop laughing because it’s $300 one time,” said Mr. Bloomberg. “They go anyplace else, they pay $1,000 every two weeks. And it’s such a small percentage of their budget.”
If a producer is in Bloomberg’s list of contacts, he has probably already experienced success in the film or television industry and has a large budget. I am skeptical that Bloomberg has any small-scale, independent filmmakers on speed-dial. Additionally, I’m not surprised at all that these large-scale producers would support an additional barrier to entry in the film industry — the fee positively affects them because it protects them from future competitors. This is a prime example of rent seeking.
Mayor Michael Bloomberg […] said the fee was too small to impact Hollywood business decisions.
Although $300 may not be significant to productions with large budgets, this fee could have a measurable effect on smaller, independent productions. Many of these producers will decide to move away from New York City as a result of this policy, and it’s possible that some of them may end up in Missouri. According to the Missouri Film Commission, Missouri does not require local film permits.